BYD Accelerates International Expansion as Mexico Plant Hunt Intensifies and EU Tariff Flexibility Grows

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BYD is accelerating its push to widen production capacity overseas. In Mexico, Reuters reports the company is among the finalists to acquire a large automotive facility, while in Europe policymakers appear to be opening up more room for Chinese electric-vehicle manufacturers to negotiate tariff exemptions on a per-model basis.

A core practical question now faces BYD: where can the company achieve faster, more efficient local production—the purchase of an existing plant or the creation of new European structures?

• Mexico: BYD is a finalist for a plant with a yearly capacity of 230,000 vehicles
• EU: China signals openness to model-by-model tariff negotiations with the EU
• Growth target: BYD aims to lift overseas sales to 1.3 million vehicles in 2026 (roughly 25% higher)
• Base: 4.56 million New-Energy-Vehicles were sold in 2025

According to Reuters, BYD and fellow Chinese rival Geely are among the leading contenders for a Nissan–Mercedes-Benz site in Aguascalientes. The factory is slated to close after Mercedes shifted production to Hungary and Nissan began phasing out Infiniti models.

The finalists emerged from a nine-strong field. Other mentioned candidates include Chery, Great Wall Motor, and VinFast. The clustering of Chinese manufacturers vying for a Mexican foothold could shift the balance in a market that has been dominated historically by American, European, and Japanese brands.

Mexico holds strategic importance for BYD. AutoForecast Solutions notes that the share of the Mexican market controlled by Chinese automakers rose from zero in 2020 to about ten percent by 2025. The country’s annual auto volume runs around 1.5 million vehicles. BYD had previously planned a new factory, but regulatory hurdles reportedly impeded the project. Securing an existing site could shortcut the path to local production, including access to a workforce and existing infrastructure.

EU tariffs: More room for individual deals

In Europe, the framework for Chinese EV exports is shifting. China’s Ministry of Commerce signaled greater flexibility for Chinese manufacturers to strike tariff exemptions with the EU on a per-model basis. The move followed Volkswagen’s deal, which exempted the China-produced Cupra Tavascan SUV from offset duties in return for commitments on minimum prices and sales quotas.

The China Chamber of Commerce to the EU indicated that some producers are already considering submitting their own Price Undertaking proposals. Under EU rules, automakers can seek exemptions on a model-by-model basis. For affected players, three routes exist: pay the tariffs, negotiate a minimum price, or manufacture in Europe to avoid duties. In 2025, Chinese automakers accounted for just over ten percent of the European EV market.

Macquarie strategist Eugene Hsiao described the Volkswagen arrangement as favorable for both Chinese and foreign manufacturers operating in China, though he cautioned that approvals will take time since the EU approves decisions on a per-model basis.

Abroad push meets domestic weakness

The international expansion comes as BYD faces headwinds at home. CNBC reports that BYD’s January domestic deliveries marked the lowest level in almost two years, signaling softer momentum in the Chinese EV market.

Nonetheless, BYD remains on a growth trajectory. In 2025, the company sold 4.56 million New-Energy-Vehicles. For 2026, BYD targets overseas sales of 1.3 million vehicles, representing about a 25% increase over the previous level.

@ boerse-global.de | CNE100000296 BYD